As the world is becoming increasingly centered on digital services and content, many people around the world are transitioning to web-based freelance careers instead of working for just one company. These people are sometimes referred to as digital nomads, and more and more people are working in these types of positions every day. As a freelancer of any kind, the process of managing your taxes is going to be much different than it is for someone who works for just one employer. In particular, there are many tax deductions or tax relief policies you can take advantage of to avoid dealing with IRS debt. Here are some of the most important tax deductions for freelancers.
- Home office space and supplies: This is very important for anyone who spends most of their time working out of their home. The IRS will allow you to deduct a portion of your rent or mortgage from your taxes if you can show that you do work from home. You can also deduct a portion of your utilities. To do this, all you have to do is calculate what percentage of your home is taken up by your office. For example, if you have five rooms in your home and one is an office, then that number would be 20%. You can also deduct home office supplies, such as your computer or printer, as well as phone and internet services. Because of these deductions, you can easily set up a comfortable home office that will encourage productivity.
- Website and advertising: In today’s competitive market, it is very important for all small businesses to have an amazing website and a great marketing strategy. However, many people are put off from doing this because it can be very costly. Luckily for most freelancers, you can actually deduct the cost of hiring a web designer on your taxes. You can also deduct other costs that go along with that, such as a graphic designer or photographer. Additionally, you can write off the costs of any other ads or marketing strategies that you use to promote your business.
- Business travel: Although many freelancers can do the majority of their work online, there are still going to be instances when you have to travel for meetings or trade shows. You can deduct the cost of travel in these instances. This means you can deduct airfare or train/bus passes, or the cost of gas if you decide to drive. You can also deduct the cost of a hotel. You can even deduct up to 50% of any meals on the go that are associated with your business.
Although being a freelancer can be financially stressful at times, there are many tax deductions you can take that will significantly ease this burden. Since the government wants to encourage people to start their own businesses, they are quite supportive in this respect. Have questions about what is and isn’t deductible, or need help with back tax relief? Call your local tax professional to find out more about how you can make the most out of your tax return.